Despite the gloomy outlook, Canada is still churning out hot employment data. Statistics Canada (Stat Can) data shows the economy added over 100,000 jobs in December. Along with higher participation, this helped drive the unemployment rate within spitting distance of the record. At least one Big Six bank sees another rate hike, with robust job data reinforcing that need.
Canada’s Job Market Is Still On Fire Despite Rising Rates
Canadian employment reinforced the economy is still running hot, despite rising rates. Canada added 104,000 jobs in December, much higher than expectations. BMO notes this is the second time in three months the economy has printed a six-digit increase in jobs.
A rise in jobs and increased participation drove the unemployment rate even lower. It fell 0.1 points to 5.0% in December, slightly above the 50-year low of 4.9%. The gains appear to be healthy ones too, according to the bank.
“Most aspects of today’s release were robust, with the increases mostly full-time (+85k) and entirely in the private sector for a change (+112k),” said Douglas Porter, chief economist at BMO.
He isn’t doubting that a recession will arrive within the next few months. Employment is the last pillar to give out before a recession, he suggests. However, this data was much stronger than the relatively flat growth the market anticipated.
“At the very least, today’s robust results support the view that the BoC will hike rates again later this month,” he said.
Canadian Employment Data Reinforces The Need For Higher Rates
The positive data reinforces the bank’s upward revision of their interest rate forecast. They see a 0.25 point hike at this month’s Bank of Canada (BoC) meeting, bringing the rate to 4.5%—the highest in well over a decade. They then expect it to hold for at least the year, as the BoC reassess the impact.
“Suffice it to say that with wages still running around 5% and the jobless rate holding at 5%, the risk is heavily tilted to the need for the Bank to ultimately do even more to quell underlying inflation pressures,” said Porter.